Section 4.1: Gross Earnings. Unit 4.1 Vocabulary 1. Base salary 2. Commission 3. Commission employees 4. Double Time 5. Gross Pay 6. Hourly employees.

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Presentation transcript:

Section 4.1: Gross Earnings

Unit 4.1 Vocabulary 1. Base salary 2. Commission 3. Commission employees 4. Double Time 5. Gross Pay 6. Hourly employees 7. Overtime 8. Piece rate 9. Piecework employees 10. Quota 11. Salaried employees 12. Salary plus commission basis 13. Straight commission 14. Time and a Half

Gross Pay (also called Gross Earnings) The amount of money an employee earns before taxes and other deductions are taken out of his or her paycheck Ewww! Gross!

Salaried Employees Employees that earn an annual wage no matter how many hours were spent working or how much output the employees produce. Note: These employees are generally professionals. That means they have earned an advanced degree (college, university, or postsecondary institution) or have highly specialized skills. Examples? Doctor Accountant Teacher Athlete

Salaried Employees: Do not receive extra pay for late hours worked at the office. Do not receive extra pay for working at home to meet a deadline or prepare for a meeting. Do not receive extra pay for coming in on weekends or holidays. But also do not lose salary if they miss a reasonable number of days due to sickness or a family emergency.

Examples - Salaries Felipe is a salaried employee that earns an annual income of $46, What is his monthly income? Carmen is a pediatrician and earns an annual income of $117, What is her monthly income? 46,500  12 = $3,875 Note: Divide by 12 since there are 12 months in the year. 117,600  12 = $9,800

Hourly employees Employees that are paid a set rate per hour, and then paid for the number of hours they work. Working 40 hours per week (8 hours per day for 5 days) is considered Full-Time If an employee works more than 40 hours per week, he or she will get paid more than their normal hourly rate.

Examples - Hourly Lattimer gets paid $9.60 to work part time at Applebees. He worked 18 hours last week. What were his gross earnings? Frankie gets paid $8.75 per hour to work at Yankee Candle at the Outlet Mall. He worked 39 hours last week. What were Frankie’s gross earnings? 9.60  18 = $ Note: Multiply the number of hours worked by the rate per hour  39 = $341.25

Overtime When an employee works more than 40 hours per week.

Time and a half For each hour over the forty regular hours, the employee will get paid 1½ times the regular rate of pay.

Examples – Time and a Half Laura gets paid $15.25 per hour as a bank teller at First Priority Bank. She worked 50 hours last week. How many overtime hours did she work? What is her time-and-a-half rate of pay? What is her gross pay? 50 – 40 = 10 overtime hours  1.5 = $  = $  = $ Total: $838.80

Examples – Time and a Half Francisco gets paid $13.50 per hour as a manager at Beef’O’Brady’s. He worked 47 hours last week. How many overtime hours did he work? What is his time-and-a-half rate of pay? What is her gross pay? 47 – 40 = 7 overtime hours  1.5 = $  = $  = $ Total: $681.75

Special Note: Many times, hourly workers will be paid for at least ½ hour work. Meaning, if an employee works 6 hours and 13 minutes, he or she will get paid for 6½ hours or if an employee works for 9 hours 48 minutes, he or she will get paid for 10 hours. So: Round up to the nearest half hour when calculating hours worked.

Double time On holidays, overnight trips, or other special occasions, businesses will sometimes offer to pay employees twice the regular hourly rate.

Piecework employees Employees that are paid by the amount of output they create. They receive a specified amount of money for each unit produced. The apparel industry typically operates this way. Individuals who can make clothes are paid a certain amount for each article of clothing they create. The articles are called pieces.

Piece rate The amount of money an employee earns for producing each piece of output.

Examples - Piecework Bill works in piecework, creating widgets. He gets paid $1.25 per widget. Last week he made the following number of widgets: Monday—45, Tuesday—50, Wednesday—48, Thurday—54, and Friday—46 How many widgets did he make last week? What were Bill’s gross earnings? = 243 widgets 243  1.25 = $303.75

Examples - Piecework Sandra works part-time cleaning houses. She charges $15.00 per room she cleans. One week she cleaned the following number of rooms: Monday—3, Tuesday—4, Wednesday—5, Thurday—6, and Friday—7 How many rooms did she clean? What were Sandra’s gross earnings? = 25 rooms 25  = $375.00

Commission employees Employees that are paid a specified percent of the sales they generate. Examples: Real Estate Agents Car Salesmen Court Attorneys

Commission A percent of the dollar value of sales.

Examples - Commission Ryan Duval is a real estate agent in Beverly Hills. He makes 12% commission on his houses and he just sold a house for $895,000. What is his gross earnings? $895,000  0.12 = $107,400

Examples - Commission Leanne is a real estate agent who earns 15% on each property she sells. One month she sold a condo worth $56,800, another condo worth $49,000, and a house worth $89,200. Find her gross earnings. First, add the total value of the properties: 56, , ,200 = 195,000 Next, calculate her commission: 195,000  0.15 = $29,250

Straight commission A given dollar amount that an employee can earn for each sale. For instance, Jim from The Office earns $1,000 for every new account he opens at Dunder-Mifflin Paper Company.

Salary plus commission basis When a salesperson gets paid a salary along with a commission on top of that. - This means, an employee can make more money if they sell more products, but no matter what, they will at least get paid a certain amount.

Base salary When an employee gets paid on a salary plus commission basis, the amount they are guaranteed to be paid each week is called the _____________. Note: The Base salary is usually not very high.

Quota When an employee gets paid on a salary plus commission basis, once they make sales past a certain point they begin to earn commission. The number of sales they have to make to begin making commission is called the ________________.

Examples - Commission Carly Christianson sells large appliances at Best Buy. She earns a salary of $150 per week plus 10% on her appliance sales over her quota of $2,000. Last week she sold $6,750 worth of appliances. Find Carly’s gross earnings for the week. First, find the amount of her sales above quota: 6,750 – 2,000 = $4,750 Next, calculate her commission: 4,750  0.10 = $475 Finally, add her commission to her base salary: $475 + $150 = $625